Taxing Situationshttps://taxingsituations.wordpress.com
Tax Situations SimplifiedMon, 09 Oct 2017 16:56:15 +0000enhourly1http://wordpress.com/https://secure.gravatar.com/blavatar/3572ee57387d35c8676f6876106fd433?s=96&d=https%3A%2F%2Fs2.wp.com%2Fi%2Fbuttonw-com.pngTaxing Situationshttps://taxingsituations.wordpress.com
Keep Track of Mileage!https://taxingsituations.wordpress.com/2017/10/09/keep-track-of-mileage/
https://taxingsituations.wordpress.com/2017/10/09/keep-track-of-mileage/#respondMon, 09 Oct 2017 16:51:39 +0000http://taxingsituations.wordpress.com/?p=894]]>Although it’s critical for those with business mileage to keep careful track of each and every mile, it’s also handy for many to keep track of medical and charitable mileage as well. This handy program can add several dollars to your itemized deductions with little effort on your part simply because you generally carry your phone with you when you travel! The initial plan is free, but if you do a lot of driving for any of these activities, consider the upgrade and take the discount!

MileIQ is an automatic mileage tracker that takes the hassle out of keeping a mileage log. I think you’ll find it helpful for logging your business drives!

The MileIQ app runs in the background on your iOS or Android phone and logs every drive automatically. You swipe each drive to classify it as business or personal, and MileIQ calculates the value of your deductible mileage. You can add details like parking, tolls, purpose and vehicle and have a complete, accurate mileage log practically effortlessly! Your log gets synced to the cloud, so you can get to it any time, even years down the road. You’ll be able to claim the full value of your mileage deduction with total peace of mind.

This year, MileIQ is offering my clients a 20% discount on annual unlimited-drive plans. Subscriptions are regularly priced at $5.99/mo. or $59.99/yr. (Here’s how to redeem promo codes.)

You can try MileIQ by downloading the free app for iOS or Android. To get an annual unlimited-drive plan at a 20% discount, sign in to your MileIQ web dashboard, click “Get Unlimited Drives” and use promo code SSCH672A at checkout. (Note that the discount is not valid for in-app upgrades or monthly plans.)

I hope you’ll give MileIQ a try and let me know what you think. (And remember, the subscription is usually deductible too — at 53.5 cents for every business mile in 2017, it’ll pay for itself in just a few drives!)

Promo Code: SSCH672A

Filed under: 2017 Information, Employee Business Expenses, Mileage Deductions, Sch C, Self Employed Business Concerns]]>https://taxingsituations.wordpress.com/2017/10/09/keep-track-of-mileage/feed/0susan614MI Tax Benefits for the Militaryhttps://taxingsituations.wordpress.com/2017/05/30/mi-tax-benefits-for-the-military/
https://taxingsituations.wordpress.com/2017/05/30/mi-tax-benefits-for-the-military/#respondTue, 30 May 2017 15:44:58 +0000http://taxingsituations.wordpress.com/?p=878]]>Current and former military members may be eligible to receive:

Military Pay Tax Exemption. Military pay is exempt from Michigan tax, including military retirement benefits and exit and separation pay.

Children of Veterans Tuition Grant. This program provides undergraduate tuition assistance to the children of a Michigan veteran. Students may receive scholarship assistance for up to four academic years for a total of up to $11,200.

Summer Property Tax Deferment.A serviceperson, veteran or widow or widower whose income outside of military compensation is no more than $7,500 per year may be eligible for a summer property tax deferment.

See your tax preparer and/or your local property tax assessor if you think any of these benefits may apply to you!

Filed under: MI returns]]>https://taxingsituations.wordpress.com/2017/05/30/mi-tax-benefits-for-the-military/feed/0susan614Upset Over Election Results?https://taxingsituations.wordpress.com/2017/01/20/upset-over-election-results/
https://taxingsituations.wordpress.com/2017/01/20/upset-over-election-results/#respondFri, 20 Jan 2017 18:17:05 +0000http://taxingsituations.wordpress.com/?p=863]]>Many people over the last year were overheard stating they intended to leave the country if the candidate they disliked won the election for President of the U.S.. Well here are some tax consequences of the move:

If you keep your citizenship and move out of the U.S., you are still required to pay U.S. taxes on all worldwide income. Don’t forget to indicate foreign bank accounts with more than $10,000 on your tax return.

If you give up U.S. citizenship, there is an “Exit” tax. Yup, who would have guess it?!!! However the tax only comes into play if your average annual tax for the previous five years was greater than $161,000 OR you have at least $2 million in net worth. The government treat it as if you sold all your assets, lets you deduct $700,000 as an exemption, and you will pay an “Exit” tax on the remainder.

So, just how badly do you want to leave?

Filed under: 2017 Information]]>https://taxingsituations.wordpress.com/2017/01/20/upset-over-election-results/feed/0susan614MI Sales Taxhttps://taxingsituations.wordpress.com/2017/01/11/mi-sales-tax/
https://taxingsituations.wordpress.com/2017/01/11/mi-sales-tax/#respondWed, 11 Jan 2017 18:05:54 +0000http://taxingsituations.wordpress.com/?p=859]]>As we all know, the MI return asks taxpayers to voluntarily report any unpaid sales tax on the tax return each year. Many states haven’t been able to count on the monies generated by the sales tax generated by the purchases generated by the residents on purchases made on line.

However, a good bit of e-commerce is no longer subject to tax according to the Supreme Court. A recent decision stated that unless out-of-state sellers have a physical presence in the buyer’s home state, purchases are not taxable. Collection is required only for retailers with a physical presence, a store, factory, warehouse etc. Some states are now enacting laws in an effort to get around this, for example requiring tax collection if weblinks are within the state. Expect more litigation on this issue.

For now, it seems reasonable to assume that any store with a physical presence, should have purchases reported on your tax return if sales tax wasn’t paid on the purchase.

Filed under: MI returns, Uncategorized]]>https://taxingsituations.wordpress.com/2017/01/11/mi-sales-tax/feed/0susan614Repeat Warning About Scam Callshttps://taxingsituations.wordpress.com/2017/01/06/repeat-warning-about-scam-calls/
https://taxingsituations.wordpress.com/2017/01/06/repeat-warning-about-scam-calls/#respondFri, 06 Jan 2017 17:51:02 +0000http://taxingsituations.wordpress.com/?p=856]]>It bears repeating at this time of the year that the IRS will NOT call taxpayers regarding tax debts without first sending a specific letter about the debt in question. Even then the call would be questionable. They will NEVER ask for payment over the phone, and will NEVER imply or state that agents or police will make a visit to your home if you do not pay while on the phone.

If you receive such a call, hang up immediately, do not engage in conversation. Calls can be reported to Treasury inspectors at 1-800-366-4484 or by filing a complaint with the Federal Trade Commission at http://www.ftc.gov

Filed under: IRS notices, Uncategorized]]>https://taxingsituations.wordpress.com/2017/01/06/repeat-warning-about-scam-calls/feed/0susan614As Holidays Approach, IRS Reminds Taxpayers of Refund Delays in 2017https://taxingsituations.wordpress.com/2016/11/29/as-holidays-approach-irs-reminds-taxpayers-of-refund-delays-in-2017/
https://taxingsituations.wordpress.com/2016/11/29/as-holidays-approach-irs-reminds-taxpayers-of-refund-delays-in-2017/#respondTue, 29 Nov 2016 15:32:07 +0000http://taxingsituations.wordpress.com/?p=854]]>Anyone with an Earned Income Credit or Additional Child Tax Credit will not have their tax return processed until Feb 15th. IRS will “stack” the returns sent earlier and begin handling returns with those two items on that date.

With the kick-off of the holiday shopping season beginning after Thanksgiving Day, the Michigan Department of Treasury reminds Michiganders to account for “use tax” when sales tax is not factored into the final price of items purchased online.

Michigan’s use tax generally applies to purchases made when a retailer does not collect sales tax. This often happens when individuals purchase items through online or mail-order retailers or television shopping networks without physical locations inside the state of Michigan.

“When you buy an item online and the retailer doesn’t charge sales tax, you are required to report and pay the use tax on that item,” Michigan Treasurer Nick Khouri said. “The revenue collected from these taxes fund some of our most-important community services, such as schools and local police and fire departments. By not reporting these taxes, you are shortchanging municipalities and school districts of potentially hundreds of millions of dollars.”

The Michigan Department of Treasury’s Office of Revenue and Tax Analysis estimates between $200 and $300 million is lost each year due to Michiganders not reporting their use tax. Most of the dollars collected from taxpayers go to the School Aid Fund, General Fund and to the Local Community Stabilization Authority.

The use tax is calculated at the rate of 6 percent of the total purchase. Items subject to use tax include appliances, books, clothing, computers, DVDs, CDs, electronics, furniture, pre-written computer software and tobacco products.

Taxpayers can report the use tax annually when filing their Michigan Individual Income Tax Return.

The IRS is warning taxpayers and practitioners that a new scam uses fraudulent CP2000s to solicit money from taxpayers. The fraudulent forms look convincing, and show balances due that are small enough that taxpayers just might pay rather than arguing the point.

However, upon closer inspection, these forms have telltale signs of fraud:

The instructions direct the taxpayer to make out a check to “I.R.S.” rather than to “United States Treasury;” and

The return address is “Austin Processing Center, P.O. Box 15264, Austin, TX 78761-5264,” which does not match the address listed on the IRS website for the Austin Processing Center.

Tax practitioners should advise clients to contact them if any unexpected balance due arrives from the IRS, so that the correspondence can be verified.

If you have a high-deductible health plan, or HDHP, are not enrolled in Medicare and are not someone’s dependent, you’re eligible for an HSA. Such an account has many benefits as a means to save for retirement.

In order for your health care to qualify as an HDHP you’ll need to be enrolled in a plan where you have to meet a high deductible of out-of-pocket expenses before insurance will cover medical-related costs.

“According to the IRS, those are plans with an annual deductible that is not less than $1,300 for self-only coverage or $2,600 for family coverage, and the annual out-of-pocket expenses (deductibles, copayments and other amounts, but not premiums) do not exceed $6,450 for self-only coverage or $12,900 for family coverage,” reported chief investment officer of Better Money Decisions Kate Stalter in a May 2016 article for U.S. News.

If you are financially able to enroll in an HDHP, there are benefits you can take advantage of in opening an HSA that you should consider.

Triple tax breaks – Unlike other savings vehicles, such as 401(k)s, IRAs and other interest-building accounts, HSAs have several advantages when it comes to taxable investments.

“Its first advantage is that contributions are tax-deductible, or if made through a payroll deduction, they are pretax. Second, the interest earned is tax-free. Third, account owners may make tax-free withdrawals for qualified medical expenses. Qualified expenses include most services provided by licensed health providers, as well as diagnostic devices and prescriptions,” explained Stalter.

The triple tax break afforded to HSA accounts makes them very desirable as a savings vehicle. Even traditional IRAs and 401(k)s have a tax on withdrawals, and funds within Roth IRAs are taxed upon contribution.

“There’s no other vehicle under the tax code that has the kind of preferential treatment that Health Savings Accounts have. But it’s a way for those who are not focused on tax shelter opportunities to put the money aside as well,” says senior vice president of Advisor Services at Manning & Napier Shelby George.

Ease of use – HSAs are traditionally meant to help individuals save money for future health care costs. As long as you’re 65 or older, you can withdraw funds from the account penalty free.

You can even use these funds for nonmedical expenses, but with a 20 percent income tax fee. Regardless of what the money is used for, it’s easy to access your funds.

“You can receive blank checks, a debit card or both [to easily take money out of the account]. The debit card may be used for online purchases,” explained Forbes contributor Sharon Waldrop in an August 2013 article.

Long-term savings – An HSA also has benefits that, when taken advantage of, can provide long-term savings as another route for retirement planning.

“With a Health Savings Account, the money stays with you even if you don’t spend all of it during the year. There is no pressure to ‘use it or lose it’ [as in a Flexible Spending Account], which encourages people to be wasteful and get [health care services] they may not need,” reports Director of Taxation at Maier Markey & Justic LLP Bernadette Schopfer.

Furthermore, Co-Owner and Principal of Alpha Financial Advisors Ann Reilly Gugle suggests allowing your HSA to grow tax-free and investing your money for long-term appreciation, rather than spending it on health care needs as they occur.

“In this sense, the HSA resembles a Roth IRA, in that it grows tax free, but you also get the benefit of a current deduction” that Roth IRAs do not, she says.

Especially if you’re already maxing out your 401(k) and IRA plans, you should consider investing in an HSA to build as much capital as you can for retirement.

—This was an excerpt from an article on the Extra Credit Union website Sept 2016

Filed under: 2016 Information, Affordable Care Act, Flex Spending, Healthcare Law, Medical Deductions, Uncategorized]]>https://taxingsituations.wordpress.com/2016/09/26/the-benefits-of-an-hsa-investing-in-an-hsa-has-certain-benefits-over-investing-in-other-savings-accounts/feed/0susan614Health Insurance Deduction for Self Employedhttps://taxingsituations.wordpress.com/2016/09/14/health-insurance-deduction-for-self-employed/
https://taxingsituations.wordpress.com/2016/09/14/health-insurance-deduction-for-self-employed/#respondWed, 14 Sep 2016 18:31:21 +0000http://taxingsituations.wordpress.com/?p=823]]>Those that are self employed (File a Sch C on their Federal 1040) are entitled to claim a deduction for the cost of the health insurance paid that has some tax advantages over other tax payers. It is called an “above the line” tax deduction because the deduction occurs on the front page of the tax return and therefor reduces taxable income dollar for dollar.

Health insurance premiums that qualify include:

Long-term care Insurance premiums (up to the age-based maximum)

ACA marketplace premiums net of the advance premium tax credit (APTC)

Payback of any portions of the APTC in the year of the APTC

Employee costs for employer group coverage

Medicare parts B, C and D premiums

Medicare supplemental plan premiums

Dental insurance premiums

Vision insurance premiums

Lost or damaged contact lens premiums

Premiums can include those that cover the taxpayer as well as the taxpayer’s family. However, if the self employed individual is able to participate in a subsidized (over 50% of the costs covered) plan for any month, then the costs for that month are excluded. Any expenses disallowed due to income limitations can be utilized on Sch A.